What is an Interchange rate?

On a Credit and Debit card merchant account interchange rates are generally the highest fees charged to a merchant. They are the amount that is charged to the merchant and passed through to the bank that issued the card. The interchange rates will vary depending on the type of card. A bank debit card will have lower rates whereas a business or corporate card will have higher rates. In general, the interchange rate will be higher for cards that offer more value such as rewards.

Interchange rates are generally made up of a percentage of the amount processed plus a transaction fee. E.g. 1.50% plus $.10. On a $100 purchase the interchange cost would be $1.60.

Interchange is also effected by the method and timing of the card processing. For example, a card that is read through a terminal will have a lower interchange rate than a card that is key entered.

There are several hundred interchange rates across Visa, MasterCard, American Express and Discover. However, in most cases a merchant will see around 10 different rates on their statements but it can vary depending on the type of merchant.

Interchange pass-thru pricing will show-up on a statement with each of the interchange categories that were processed within the month. While it may be confusing it is generally the best method to keep the overall cost to a minimum. We recommend that when trying to compare rates, calculate the Effective Rate, which is the total amount of fees charged divided by the total dollar amount processed.